The euro is in the midst of its third day of large declines, touching the lowest since June 6.

Support at the moment is at 1.3127, which is the 50% retracement of the June rally. I don’t expect that to hold as dollar demand swells. The bigger area of support is the cluster from 1.3079 to 1.3090 representing the 55, 100 and 200-day moving averages with the 61.8% retracement at 1.3059 just below.

EURUSD daily chart June 21, 2013

A large portion of the euro rally in June was fueled by short covering. Expect the market to sell bounces.